Analysts see 'dead cat' bouncing

LONDON, England (CNN) -- European markets may be bouncing back from Friday's rout but analysts say it could be little more than a "dead cat" bounce.

One of the many metaphors that the animal kingdom provides financial markets, a "dead cat bounce" is used to describe a temporary rebound in stock or commodity prices after a big sell off. As bargain hunters jump into a market, prices bounce back -- but not for long.

David Buik, at spread betting group Cantor Index, used the term in his Monday morning note to investors to suggest the market could not sustain the upward trend (Full story) amid concerns the U.S. economic recovery was faltering and with little let up in Corporate America's management woes.

In market parlance, a "dead cat" bounce is a phenomenon found in a "bear" market.

"Bears" typically come out of the woods to drive down markets amid economic and corporate gloom. But even in a "bear" market there is money to be made, through a technique called short selling -- or selling shares that you do not own.

Short selling works like this: An investor expects shares of company X to fall and borrows 100 shares in X and sells them at $5 each. If he or she is right and the shares drop to, say, $4 the investors can buy back 100 shares and return them to the lender -- pocketing a $100 in profit.

In such a market, there is a huge difference between a bounce and a change in trend, which can only come about when investors expect economic conditions and corporate performances to alter for the good.

As traders are fond of saying, even a "dead cat" will bounce -- at least once -- if you drop it from a great height.

Predicting the bottom of a market can make millions for investors, but betting on an upturn before it has truly taken root could cause them to lose their shirts.